On 26 January 2022, the England and Wales High Court ruled that a television broadcaster RDA Television was entitled to terminate its contract with European Professional Club Rugby (EPCR) relating to European rugby union competitions, after the Covid-19 pandemic caused the postponement of the final stages of the 2019-20 professional rugby season.
The court held that the contract provided for the matches to be arranged within the season and EPCR's delay in hosting these matches entitled RDA to terminate the contract pursuant to its force majeure provisions.
Force majeure events are acts, events or circumstances (caused by nature or humans) which are beyond the control of the parties to a contract, and which are designated as such by the parties.
The relevant clause in the RDA-EPCR contract provided that, if a force majeure event prevented, hindered or delayed performance for a continuous period of more than 60 days, "the party not affected" by the event could terminate on 14 days’ written notice.
In the court's view, this clause had been triggered by the postponement of matches.
In 2018, EPCR (the governing body and organiser of the two European professional rugby union competitions: the European rugby Champions Cup and the European Rugby Challenge Cup) licensed its media rights in the competitions to RDA for the next four seasons.
Importantly, the agreement provided that EPCR would stage each of the competitions during those four seasons.
The agreement contained a force majeure clause, which defined a "Force Majeure Event" as:
"[A]ny circumstances beyond the reasonable control of a party affecting the performance by that party of its obligations under this Agreement including inclement weather conditions, serious fire, storm, flood… epidemic, embargoes and labour disputes of a person other than such party".
The agreement also contained provisions that protected a party from a claim for damages for a breach arising from a force majeure event and gave the non-defaulting party the right to terminate the agreement if the force majeure event delayed the other party’s performance by more than 60 days.
On 20 March 2020, EPCR wrote to RDA stating that it had decided in the interest of safety that the quarter-finals, semi-finals and finals of the European competitions would have to be postponed due to the World Health Organisation's decision on 11 March 2020 to characterise Covid-19 as a pandemic.
On 30 April 2020, RDA refused to pay the final instalment for the 2019-20 season while the season was suspended and while it remained unclear whether (or when) the remaining matches would occur.
EPCR wrote back on 13 May 2020 stating that the remaining matches would not take place that season, but the aim was to hold the final matches at the start of the following season in September or October 2020.
On 5 June 2020, RDA served notice to terminate the agreement on the grounds that EPCR had been prevented, hindered or delayed for a continuous period of more than 60 days as a result of a force majeure event.
EPCR brought a claim for damages for wrongful repudiation, arguing that RDA was not entitled to terminate the agreement, and for unpaid fees; RDA counterclaimed for prepayments made to EPCR and for an adjustment of the sum paid for the season in which the agreement was terminated.
The court's decision
The court dismissed EPCR’s claims for wrongful repudiation and found that RDA had been entitled to terminate the contract as a result of EPCR’s postponement of the matches.
There was no dispute between the parties that the pandemic was a force majeure event, as defined in their agreement.
Accordingly, the question for the court was whether, properly construed, RDA was entitled to terminate the agreement as a result.
The judge rejected EPCR's argument that the agreement permitted it to complete the European competitions in any following season, as long as it fell within the overall contract term, and therefore the 60 day period never started running.
On a proper construction of the contract, EPCR was required to stage each of the European competitions during each of the defined rugby seasons, which for 2019-20 ended on 20 June 2020.
By the time RDA gave notice of termination, EPCR had explicitly made it clear that it would not be able to complete the staging of the 2019-2020 season.
EPCR had also submitted that RDA could not terminate, because that right was given to the party not affected by the force majeure event, and by its own admission, RDA had been affected by Covid-19 because some of its own partners and sub-licensees were refusing to pay invoices due to postponement of matches.
The court also rejected this submission, stating that this was a mistaken construction of the agreement, and the relevant clause was clearly intended to distinguish between the party whose performance was affected by the force majeure event, and the party owed the performance that had been prevented, hindered or delayed.
This decision confirms the correct approach to be taken to contractual interpretation and provides a useful summary of the key principles and authorities.
The court's judgment was a matter of contractual construction and the outcome of such cases will be fact-specific.
Earlier this year, on 11 January, the High Court also considered whether the postponement of Premier League football matches constituted fundamental change to the format of the competition (see the judgment here).
On this occasion, the court held that the postponement of matches and the fact the matches were held without fans were not fundamental changes to the format and accordingly the licensee was not entitled to terminate the contract (see our analysis of this case here).
The force majeure clause in that case was drafted more restrictively and so neither party sought to rely on that clause.
These two cases show that similar factual circumstances (i.e. disruption to sporting competition caused by the Covid-19 pandemic) can give rise to different results based on the specific wording of the respective contracts. Therefore, it is vital that such clauses be drafted with care.
This article was authored by James Lewis, partner and Bhavul Haria, associate in Fieldfisher's dispute resolution team
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